Delhi High Court clears auction of high-profile Taj Mansingh Hotel of Tata Group

NEW DELHI (The Statesman/ANN) - The ongoing turmoil in the Tata Group has deepened with the Delhi High Court clearing the decks for the auction of the upend Taj Mansingh Hotel, managed by the Group.

Amid the current turmoil in the Tata group over the unceremonious removal of chairman Cyrus Mistry, the  Delhi High Court on Thursday cleared the decks for auctioning the iconic Taj Mansingh Hotel in the national capital of New Delhi, dismissing Indian Hotels Company Ltd's (IHCL) plea challenging the move by the New Delhi Municipal Council (NDMC), saying the firm has “no right” for renewal of the licence period. Mistry had alleged that the Indian Hotels Company, managed by the Tatas, was a "loss-making" interprise mired in debts.  A bench of Justices Pradeep Nandrajog and Pratibha Rani observed that NDMC was “within its power” to secure maximum consideration for grant of licence for the property at the prime location of 1, Man Singh Road, in Lutyen's Delhi. 

“To put it pithily, IHCL (which runs the hotel) has no right under the licence for a renewal thereof and therefore no further issue needed to be considered and decided,” the bench said while dismissing IHCL's appeal in which it had challenged a single judge order dismissing their suit seeking to restrain NDMC from auctioning the property. 

“It is the inherent right of every proprietor to secure maximum consideration for his property in all transactions, apart from transactions where the law limits consideration that can be charged by the proprietor, for any public purpose or in public interest,” the bench noted in its judgement. “In the case of governmental bodies like the NDMC, the implicit right of a proprietor to maximise consideration for its property is also a duty since these bodies own and transact property in a fiduciary capacity for the general public,” the court said. It also said, “in exercising its right/discharging its duty to secure maximum consideration for grant of licence in relation to property bearing No.1, Man Singh Road, New Delhi, NDMC is within its power to ensure that such measures are adopted by it which fetch the maximum revenue.” The decision was welcomed by NDMC vice chairman Karan Singh Tanwar who said the matter had been lingering since 2011. With this judgment things are clear and NDMC can move ahead with the auctioning, he added. 

IHCL had moved the division bench against the 5 September judgment of a single judge who had not acceded to the firm's request for renewal of licence for a further period, saying it was not entitled for the extension. 

The property, owned by NDMC, was given to IHCL on a lease of 33 years. The lease had ended in 2011 and the company was given nine temporary extensions since then on various grounds, with three of them granted last year itself. NDMC had in January this year said it was in the process of assessing the assets of the hotel in preparation for the much-delayed auction. In its verdict, the division bench referred to a Supreme Court judgment and said that “...unless there is a social or a welfare purpose or any other public interest which is served, an asset held for the benefit of the public, if commercially exploited should be by way of an auction or an open competitive bidding because it would then fetch the maximum revenue.” 

The bench also dealt with IHCL's contention that even if the fair consideration was determined at a public auction, it must be with right of first refusal to it. “It overlooks that such a negative stipulation qua the right of the highest bidder would obviously have an adverse impact on the bid amount for the reason the right of the highest bidder would be subject to a right created in favour of IHCL and common sense and logic dictates that why would a person bid for something which he is told is to be his subject to somebody else not matching his bid price,” the bench said.


  • Delhi High Court clears auction of high-profile Taj Mansingh Hotel of Tata Group


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